Nationwide, the country's largest building society, does so many things right. Since Covid-19 brought the economy to a virtual standstill in late March, it has reassured its mortgage customers that none of them will lose their home in the next year if their household finances have been disrupted by the virus.
Also, its boss, Joe Garner, was the first among his peers in the financial services industry to voluntarily take a pay cut in response to the pandemic. How this has impacted on his usual seven-figure annual remuneration will be revealed later this week when the society publishes its 2020 accounts.
Yet Nationwide is not an organisation without its issues or critics. Although it bills itself as one of the country's most trusted financial brands and has no shareholders to appease with regular dividend payments, it is now facing mounting criticism from savers – by far its biggest swathe of customers.
Sweet nothings: Nationwide pays paltry rates
This is a result of the deep cuts it has just applied to savings rates in the wake of the Bank of England's decision in March to cut the Bank Base Rate in two stages – from 0.75 per cent to 0.25 per cent and then to a record low of 0.1 per cent.
Indeed, one leading money expert – Anna Bowes of rate scrutineer Savings Champion – claims Nationwide 'is fast becoming another high street provider paying virtually no interest to its customers'. Damning criticism of a business that in its stated 'promises' to savers says it will 'look' after them, treat them 'fairly' and provide 'great value'.
The numbers support Bowes' controversial view. Last month, the mutual – a business owned by its 16 million savers and mortgage customers – took an axe to the interest it pays on its wide-ranging portfolio of savings accounts.
Some of the biggest cuts were applied to accounts no longer available to new customers (known in the industry as 'closed' accounts), but its flagship savings products (open to new customers) also took a battering.
The result is that the interest rate on its Instant Isa Saver account (Issue 18) is now a paltry 0.01 per cent a year on balances below £10,000 – a rate equivalent to a tenth of the current Base Rate. Although bigger balances attract interest up to 0.05 per cent, this is still half Base Rate. The same rates are being paid on Instant Access Saver (Issue 7).
So save £5,000 in either account for a year and you will earn the grand sum of 50p in interest – not enough to buy a Mars bar from Tesco (60p).
Pay cut: Nationwide boss Joe Garner was the first among his peers in the financial services industry to voluntarily take a pay cut in response to the coronavirus pandemic
He said: 'With bank base rate at 0.1 per cent, paying savings rates significantly higher than this would not be financially sustainable, nor in the long-term interests of our members or the society.' (Memo to Mr Garner: a savings rate of 0.01 per cent or 0.05 per cent is significantly lower – not higher – than 0.1 per cent.)
To put Nationwide's rates into perspective, they are now little better than those on offer from most mainstream banks. For example, Halifax's instant access account – Everyday Saver – is now paying 0.01 per cent interest while the rate on Barclays' Everyday Saver will fall to the same level in late July.
Easy access accounts from Santander (Everyday Saver) and HSBC (Flexible Saver) are also soon to fall to 0.01 per cent. The interest rate on NatWest's Instant Saver and Lloyds's Easy Saver (accounts opened since March 25) has also dropped to 0.01 per cent.
Stephen Olley, a 72-year-old management consultant from Tonbridge in Kent, says he and his family – wife Margaret and a son and daughter both in their 40s – have steadily been depleting their Nationwide savings accounts in recent months because of the poor rates on offer. They have now transferred much of their money into NS&I income bonds that pay annual interest of 1.15 per cent.
Stephen, who has been with Nationwide for some 15 years, says: 'It seems as if they no longer want our money.' He argues that paying 0.05 per cent interest on a cash Isa with a £50,000 balance now makes the account an 'irrelevance'.
This is because most people (basic rate taxpayers like him) would be better off instead taking advantage of their annual personal savings allowance of £1,000 to hold money in a best-buy savings account – the allowance is halved for higher rate taxpayers.
So, for example, £50,000 held in a Nationwide Instant Isa Saver would now generate tax-free income after a year of £25. But holding the same amount in NS&I income bonds would generate a bigger annual income of £575 – which would also be tax-free because it is less than the tax-free personal savings allowance of £1,000.
Since the double Base Rate cut in March, some 285 accounts across the savings marketplace have seen a rate cut down to just 0.01 per cent – with a few even paying nothing at all
Savings champion Bowes fears that Nationwide's savers who have already experienced 'swingeing interest rate cuts' are likely to see 'even more reductions' as the society deals with losses stemming from the coronavirus pandemic.
Yet she says Nationwide is not a lone wolf. Since the double Base Rate cut in March, she says that some 285 accounts across the savings marketplace have seen a rate cut down to just 0.01 per cent – with a few even paying nothing at all. More than 500 accounts are paying less than 0.1 per cent – 14 per cent of the savings market.
She says: 'If you've got one of these appalling accounts, you need to move your money as even in this incredibly low interest rate environment, there are far better rates to be found.'
Rachel Springall, savings expert at rates scrutineer Moneyfacts, predicts a 'summertime of sadness' for savers and does not rule out negative interest rates.
She says that instead of receiving interest on deposits, savers could be charged a monthly or annual 'holding fee' similar to that already applied to many bank accounts.
Not all money experts are critical of Nationwide and other savings institutions that have taken a knife to savings rates.
The Bank of England has cut the Bank Base Rate to a record low of 0.1 per cent
James Daley is founder of website Fairer Finance. He says: 'This is a difficult time for savers. But my feeling is that while Base Rate is at an all-time low of 0.1 per cent and we're heading into the worst recession in living memory, it's understandable that banks and building societies are cutting their savings rates.
'These institutions know that things are going to get much worse before they get better. That means they have to be prudent in what they're offering on their savings until they've seen how bad the impact of this crisis ends up being on their lending book.'
On Friday, Nationwide told The Mail on Sunday: 'We recognise it is incredibly difficult for savers in what is an extremely low-interest rate environment, but as a mutual we cannot shy away from making tough decisions to protect all our members and preserve our unique business model for the long-term benefit of our membership.
'By protecting our wider balance sheet, we continue to offer other services that our members value, such as maintaining our branch network and investment in our digital services.'
It added: 'Despite a Base Rate of 0.1 per cent, we continue to pay more than the market average by ensuring that the value of each of our products is fair to all members. We remain one of the most attractive savings providers in the market for service and reputation.'
In its last financial year, Nationwide's growth in savings deposits slowed and its share of the market reduced – an indication, some would argue, of a less attractive savings portfolio.